Write the process of government budget formulation.

The process of government budget formulation in Nepal follows a structured and systematic approach involving multiple stakeholders, including ministries, the Ministry of Finance, the Budget Council, the Cabinet, and Parliament. The entire process is divided into four key phases:

1. Budget Preparation Phase (June–July)

• The Ministry of Finance (MoF) issues a budget circular to all ministries, departments, and agencies, outlining guidelines for budget preparation.
• Each ministry prepares its Estimate of Expenditure based on:
  • Development priorities (e.g., infrastructure, education, health).
  • Past expenditure trends and economic forecasts.
  • Policy directives from the government.
• Ministries submit Budget Memoranda to the MoF by mid-July, detailing their proposed revenue and expenditure plans.

2. Budget Scrutiny and Approval Phase (August–September)

• The MoF reviews all submitted budget memoranda and prepares a draft budget, consolidating revenue and expenditure estimates.
• The Budget Council (chaired by the Finance Minister and including key economic advisors) scrutinizes the draft and makes recommendations for adjustments.
• The Cabinet approves the draft budget in principle, usually by mid-September, ensuring alignment with national economic policies.

3. Legislative Approval Phase (October–November)

• The Finance Minister delivers the Budget Speech in Parliament, outlining the government’s economic strategy, revenue projections, and expenditure priorities.
• The Budget Bill is introduced in the House of Representatives (lower house) and referred to the Committee on Finance for detailed examination.
• The Committee on Finance reviews the bill, holds public hearings, and presents a report with suggestions for amendments.
• The bill undergoes debate and voting in Parliament. If approved, it becomes the Budget Act, typically by mid-November.

4. Implementation Phase (July–June)

• Once the Budget Act is passed, the fiscal year begins (July 1 – June 30).
• Ministries and agencies receive budget allocations and begin implementing development programs.
• The Public Expenditure Tracking System (PETS) ensures transparency and real-time monitoring of fund utilization.
• Periodic reviews are conducted to assess progress and make mid-year adjustments if necessary.

This systematic process ensures that the budget reflects national priorities, maintains fiscal discipline, and supports sustainable economic growth.